Multi-Channel Sellers Debate eBay versus Amazon

You'd probably hear more than you needed to know if you asked the average person on the street to compare Ford with Chevy or Yale with Harvard. But you're likely to get a blank stare if you mention eBay and Amazon.com in the same breath.

For one thing, eBay sellers have no problem learning about their customers and doing the market research that makes a business successful. eBay's lively community provides a window into what eBay buyers and sellers want and how they shop. The frequent email exchanges between buyers and sellers provide important market research, too.

But Amazon.com is a bit of a mystery for potential sellers. Who buys on Amazon? What are shoppers looking for? Why should an eBay seller consider moving to Amazon in the first place? These were topics recently discussed on an online seminar, "Marketplace Mavens Compare eBay and Amazon," that featured Adam Hersh and Jack Sheng and was hosted by Marketworks.

But before I launch into a report on how Hersh and Sheng use eBay and Amazon together to sell different products to very distinct audiences, let me offer brief introductions.

Adam Hersh started selling on eBay in 1998 as a trading assistant and has gone on to become one of eBay's most prominent and successful TAs. For the past five or six years, he has focused on selling posters ("thousands of items per week on both Amazon.com and eBay") from his offices and warehouses in New York, Los Angeles, and Florida. At the time of this seminar in May 2007, he had 78,000 items listed on Amazon.com.

Jack Sheng founded Eforcity, which is eBay's number 1 volume seller. He says he uses both eBay and Amazon to process up to one thousand orders each day for electronic devices and accessories as well as movies.

So without further ado, here's a recap of what Hersh and Sheng had to say about Amazon.com in particular and about the differences between selling on Amazon and eBay.

Selling Prices
Both Hersh and Sheng find that they get higher prices for most merchandise on Amazon.com, though eBay is clearly the best marketplace for collectibles. "The same product sells for more on Amazon," Hersh says simply. Sheng adds, "Amazon buyers tend to be more affluent. They buy higher ASP (Average Selling Price) products. On eBay, buyers are looking for value as well as features."

Competition
Amazon.com only invites high-performing businesses to its Pro Merchant and Merchant@Amazon.com programs, which makes competition different between the two venues.

Hersh: "On Amazon, because of the pre-screening process, I tend to find that I am competing with larger businesses. On Amazon in my category (posters), smaller volume businesses might not be able to simply jump in and compete successfully."

Sheng: "eBay tends to be more global for buyers and sellers. You might be competing with merchants in other countries who have far lower costs than you do. Merchants should structure their business well enough that they can compete with sellers whose costs might be half of yours."

Sheng agrees: "eBay buyers expect just as much as Amazon buyers do after a sale, and due to the culture of eBay, they ask more questions. For instance, they ask if you have shipped a product even though we have a fully functional Web site that tells them if it has been shipped."

Listing Process
eBay gives sellers great flexibility in designing and describing listings. With Amazon, if you add your item for sale to one that is already offered in the marketplace, you fill out a standard form and use photos that are already online.

eBay charges both listing and transaction fees. Amazon.com, in contrast, does not charge for listing items. It does collect a percentage of the final sale price, plus a 99-cent per-transaction fee that is waived for Pro Merchant subscribers.

Sheng: "eBay fees are always very controversial. But you have to consider eBay as a customer acquisition channel, compare it with Google and Yahoo!, and put time into your business to see if it is worth the investment or risk to sell on eBay. With Amazon, you pay only when you sell, so you can focus on what you do the best. Because the fee structures are so different, with eBay, we make sure we don't overburden ourselves, while on Amazon we are more laid back and you can focus on whether listing product is accurate. On eBay you need to make sure the listing is attractive as well."

Hersh: "On eBay you pay for every ad you put up, and you have to crunch numbers constantly to see if you are going to be profitable or are wasting your money. On Amazon, there is basically one fee, and that includes the payment processing. With eBay, you need to think about credit card payments and checks, and you have a more complex payment platform. With Amazon, we change our keywords to keep up with popular trends and that is as much as we can do."

Visibility and Marketing
Sheng: "On eBay, your picture-taking techniques and keyword selection affect your visibility. It's a very different story on Amazon's side. Their visibility is probably one of the most secretive things about them, a logic they keep to themselves - basically you just have to maintain a good level of service and offer low prices."

Storefront Solutions
"My eBay Store is a great place to park items that I can use to upsell from my eBay listings," Hersh says. "My Amazon Web Store is more of a Web presence. Amazon lets you upsell media products listed in the Amazon catalog that complement my movie posters, and you get a portion of the sale."

Sheng and Hersh both recommend making use of many different sales venues and figuring out how to sell on them most profitably. If you have lots of items to sell and they are new or new consumer goods that are contained in its huge catalog, Amazon.com offers eBay sellers many advantages: free sales listings; standardized listing forms; no need to take photos; higher selling prices; straightforward payment, shipping, and fulfillment of transactions. For beginners and smaller eBay businesses, Amazon Seller Central is the place to start. Larger eBay businesses can apply to Amazon's Pro Merchant or Merchant@Amazon programs.

eBay and Amazon: Alive and Well
So what's the bottom line? Neither marketplace, it seems, can now claim to be better than the other across the board. But which is likely to emerge as the frontrunner? Both Hersh and Sheng are too busy making money on eBay, Amazon.com, their own Web sites, and other shopping venues like Shop.com and Shopzilla to waste time making predictions about the future. In fact, Sheng pointed to an incredible 900 percent growth rate in the past three years. This indicates that ecommerce is alive and well as long as you diversify, understand your customers, and do your best to give them what they want.

--- Greg Holden, who lives in Chicago, is the author of several books about eBay, including "How to Do Everything with Your eBay Business," second edition, and "Secrets of the eBay Millionaires," both published by Osborne-McGraw Hill. Find out more on Greg's Web site (http://www.gregholden.com), which includes a blog related to his book "Internet Babylon: Secrets, Scandals and Shocks on the Information Superhighway," published by Apress.

About the author:

Greg Holden is EcommerceBytes Contributing Editor. He is a journalist and the author of many books, including "Starting an Online Business For Dummies," "Go Google: 20 Ways to Reach More Customers and Build Revenue with Google Business Tools," and several books about eBay, including "How to Do Everything with Your eBay Business," second edition, and "Secrets of the eBay Millionaires," both published by Osborne-McGraw Hill. Find out more on Greg's website, which includes his blog, a list of his books, and his fiction and biographical writing.

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